Episode 24 Homes Under the Hammer

Bricks and mortar has always been a solid investment.

But in today's market, you have to be careful your purchase doesn't end up

falling around your ears, and taking your bank balance with it.

But if you do your research and check your finances,

you can still find a deal in the auction rooms.

Many buyers have their own techniques

when it comes to bidding at auction.

Absolutely. Some believe you should sit at the front,

others that you should hide at the back, and others believe

that you should just keep a low profile and bid over the phone.

But whether it's a wink or a wave, the end result is the same.

Let's see what people bought on today's show.

There's a five-storey guest house in Hampshire that's huge, and it

even has an extension out the back.

This just makes it a huge opportunity.

Could appearances be deceptive?

This two-bedroom property in Kent appears to be just too perfect.

So far, so good. I'm a bit worried.

And this Cheshire bungalow is very compact.

I've seen some small kitchens in my time,

but this is absolutely microscopic!

Look, I can touch both sides!

All these properties have been sold at auction, and we'll find out

who bought them and what they paid when they went under the hammer.

# Do you want to go to the seaside?

# I'm not trying to say that everybody wants to go

# I fell in love at the seaside

# I handle my charm with time and slight of hand... #

I've come to look at a house in Southsea on the south coast.

Located on the Solent, it's a lovely place to take in that sea air.

Well, the clock tower is a landmark in Southsea.

The area became a suburb of Portsmouth in 1809, and was named

after the Southsea Castle, Henry VII's castle nearby.

Originally, these homes were built for skilled workers,

and the roads named after different metals.

Here, Copper Street, nearby, Gold and Silver Street.

Unfortunately, though, it was one of the areas of Portsmouth

that was most bombed during the Second World War.

Well, maybe I could consider a change of career,

and run a guesthouse by the sea.

Can you see me as a bit of a landlord? Ooh, a bit of Rigsby.

Ooh, Miss Jones... Possibly.

This would be the place to do it for sure.

Five storeys, it's got a partially-built extension.

It had a guide price of £230-250,000.

Sounds like a lot of property for the money. Let's take a look inside.

So, what's in store behind the door? Well, I don't know.

It has definitely that feel of an old-style guest house,

nowhere more so than here in the dining room.

Look, the old furniture, it's even been laid out for breakfast.

A bit spooky. It reminds me of childhood holidays for sure,

but I guess you could just pick this up and

run with it as a business, if that's what you wanted to do.

Maybe there are other options.

Let's take a look round.

The guest house currently has six bedrooms,

some en suite and some not.

The number of bedrooms could increase

when that partially-built two-storey extension is finished.

This one at the top has great views.

You can even see the famous Portsmouth landmark,

the Spinnaker Tower.

Just!

There are some period features -

the elegant fireplaces...

..and some beautiful and original ceiling roses.

But the flooring and decor throughout

could really do with an update.

Well, upstairs it's definitely a bit of a maze.

Lots of bedrooms, many of them with en suites.

One option if you don't fancy yourself as a landlord

could be to convert this back into a dwelling.

You certainly have a lot of rooms,

although you wouldn't need this many en suites, surely.

Back downstairs on the ground floor,

the rather ramshackle kitchen is packed to the rafters after

its busy days as the nerve centre of the guesthouse.

It looks as though it could do with a face-lift.

It's also a bit dark,

but that's explained by something exciting that's going on outside.

Out the back you've got a building site, hence the hard hat,

but what you've actually got

is an extension that's partially completed.

Double-storey extension immediately adjoining the house,

and then through to a single-storey extension

which leads out onto the garden.

So the house is big anyway. This just makes it a HUGE opportunity.

I'm thinking house of multiple occupation,

renting to students from Portsmouth University that's close by.

Whatever - I think this place is a potential money-spinner.

I know about property, but I'm not an expert on Southsea, so to hear

about the appeal of the area and the market for it,

I invited a local estate agent to tell me more.

The whole city of Portsmouth, and Southsea being part of that,

has got a real mix of property.

There's lots and lots of older two-up, two-down terraced

houses which were built either the for the Royal Naval personnel or

for the dockyard workers that were supporting them,

right the way through to some attractive Victorian villas

which were built for the well-to-do of the era,

and everything in between,

so it's got a real mix of properties.

This particular road has got quite a good mix.

There's old and new.

This, I believe, is the last remaining guest house

in what was a row of very similar properties.

This side of the road at one time was all guest houses,

this being the last one.

The beauty of this property is its wide appeal.

It could be lots of different things to lots of different people.

I think it's unlikely it'll carry on as a guest house.

It could be a lovely family house for somebody,

if it's converted back.

It could be converted into apartments.

Or perhaps, due to the proximity of Portsmouth University,

it may well go into some form of letting use,

perhaps on a room by room basis for students at the University.

Although the building has planning permission for flats,

building them wouldn't be simple, and certainly cost a lot to do.

How much might it fetch on the market

if converted back into a house?

As far as resale values are concerned, I'd suggest that,

if somebody were to finish the extension

and do a really nice job of this,

then a nice family home in this area would probably command a price

of around £350,000 when it's completed.

So depending, of course, on what you want to spend on it,

there could be quite a profit here.

Bearing in mind the guide price of between 230 and 250,000.

But turning this guest house into a family home

would be a big and expensive job.

A cheaper option that would bring in a steady income could be

to make it student accommodation.

As far as rental is concerned,

I think if it were let on a room-by-room basis, assuming

there were eight letting rooms by the time the extension is finished,

that ought to bring in around £2,000 a month for the property.

That may well be limited to during university term times,

but still a very healthy income.

Well, rare is it indeed to find a property with so many options.

Keep it as a guest house, split it into bedsits, perhaps,

rent to students, turn it into a family home. I mean, wow.

Whoever takes it on, though, there's work to be done.

Unless they just run it as it is, as a guest house.

Tell you what, it's not going to be me.

I don't fancy doing all those fry-ups. Let's see who bought it.

So now we'll go to lot 130, which is Amberly International Guest House.

Can I say 250 on that one? 250 can I say, to start me?

Give me 230, then? 230 I have.

And two, now? 232 do I see?

232. And five? 235, 235. And seven?

237 I've got. 240, I'm back to you, then, at the back. At 240 I have.

And two now, if you like? 242. 242.

244? 244, yes. And six?

246 I have. And eight?

248. 247, if it'll make a difference to you? One more? One more, do I see?

247, well, I squeezed that one out.

248?

One more to you two? 248?

And nine? 249?

At 248,000 in the red.

249 against you sitting down.

At 248, I'm going to be selling for the first time.

£248,000 for the second time.

Third and final time at 248, with you in the red,

it's against you sitting down, all done?

GAVEL BANGS You've bought it, sir.

The successful bidders were Sam and his wife Ton.

They're joint bosses of a building company.

They paid £248,000 for the property,

£2,000 less than the upper guide price.

I went to meet them to hear about their plans.

We've been looking for an investment for our children,

and this was something which we thought potentially we could

turn into apartments, or use as a letting income for the future.

Wow. You're not thinking about you, but about your children.

How old are your children?

Two and seven.

-You really are planning ahead, then.

-We like to plan ahead.

It's one of those things.

Now is a good time to invest, as far as we see it.

If it can stay there, generate income over the years,

maybe they can go to university here and take it on themselves.

# Don't mind doing it for the kids

# So come on, jump on board

# Take a ride, yeah... #

Now, that's what I call real advance planning,

providing a helping hand for their children in the very distant future.

But what are their short-term plans for the property?

First option, letting out to students.

-How many bedrooms?

-Seven, eight?

So it's got to be large.

It's going to be very large, but we've still got to work out

to make it comfortable for them as well.

The other option is to turn it back into a house.

-Oh, wow!

-I know. It's going to be big.

Third option is to - well, we thought we were going to

do it into flats, but I think that's going to probably be too expensive.

The cost to convert it into, I think three,

because it has planning for three apartments, and the cost is

so large now, especially with the the building regs as they come now,

it's going to be too much,

and the resale value is going to be too little,

so probably out of the question.

The property cost 248,000, and depending on what they choose

to do with it, they may need to spend a fair bit on it.

We're looking in the region of 35 if we're going to turn it around significantly.

If it's going to be for a house, we're going to increase the standard

in regard to bathrooms and everything.

If it's going to be student letting, then we're going to put in

good products, but not necessarily top of the range,

where we would do if it was going to be a house.

No decision has yet been made, but they certainly know how much the options cost.

Have they worked out a timescale?

We're hoping to get it done in eight weeks.

-Wow. Including finishing the extension?

-Yeah. This extension is the easy part.

-Is it?

-As far as I can see, yeah.

I've a funny feeling, once I start stripping things off

things are going to start falling to bits.

Plus we're probably going to relocate kitchens and bathrooms.

Everything is a little dated upstairs with regards to en suites

in bathrooms, and we're going to sort that out.

So, Sam and Ton keeping their options open on this place, although I do get the impression

Sam would like the final plans to be decided on sooner rather than later.

I think they should stick with the idea of renting rooms to students.

It's a money-making machine if they do that.

Still, you can see what they decide later in the show.

Bromley is London's largest borough, taking in Beckenham,

Penge, Orpington, Biggin Hill and Chislehurst as well as Bromley itself.

London's only 20 minutes away by train, and 35 minutes by road.

So, if you're after a quieter suburb with excellent transport links, then Bromley could be ideal.

Just a short walk from Bromley Station, and I'm here in Newbury Road. It's a lovely, quiet street.

There's lots of attractive properties along here.

I'm looking at this semi-detached, two-bedroom house today.

The guide price? Just £200-220,000.

That seems a very reasonable guide price for this attractive property.

The location is fantastic as it's so close to the station.

The 20 minute train journey into London means there will always been interest from buyers or tenants.

OK, so, let's have a good look around.

Well, you've got two really good sized reception rooms here and here.

You know what, it always worries me when I walk into a property and there's nothing falling apart.

It's all looking a bit too good to be true at the moment.

Doesn't need decorating, the carpets are all right, you've got a lovely window here.

A view of a pretty little courtyard garden.

You've got the kitchen off the second reception room.

All in really good condition.

You have got a downstairs bathroom, though, so that could be a little bit of a negative. But so far, so good.

I'm a bit worried.

Let's go upstairs and check that out.

I'm more used to subsiding walls, damp ceilings and filthy kitchens,

but here everything looks solid, clean and in good condition.

There's got to be something, surely?

So, upstairs, much of the same.

It's a mirror image of downstairs, practically.

You've got two nice little fireplaces in each of these bedrooms.

But through here is an incredibly small room.

A study, a nursery, perhaps.

It's got the boiler shoved in a corner, which, ideally, should be downstairs in the kitchen.

You see, I would like to see a nice little en suite up here, linking from the bedroom,

but at the end of the day you've got to think about cost, and will it be worth all that extra expenditure?

If the buyers want to live here, it's worth considering, but probably not if they plan to rent it out.

Mind you, having a bathroom downstairs would be handy when you come in from the garden.

You get a really nice courtyard garden with this property.

When you take into account the proximity of the town centre,

it's nice to have any outside space at all.

But you do get the feeling you're being overlooked by that.

But the bonus, plenty of off-street parking.

There's also off-street parking in the front garden, which is important

as commuters using the local train station will park on the road.

I invited a local estate agent to have a look.

This is just around the corner from Bromley South Station, 20 minutes into central London,

so it's ideal for the commuter.

You've also a good primary school around the corner, which is great.

A lot of families want to be in this area

purely for the school and the commuter links.

He's sold me on the area, but what about the house?

Although it's in good condition, it's a bit soulless, a bit bland.

The kitchen and bathroom are quite basic.

You've got a boiler in a room upstairs which isn't ideal,

so you should probably consider moving that downstairs.

A percentage of the audience will say no to a downstairs bathroom,

but by the same token there's a large amount of people

that want three bedrooms, and that's a sacrifice you make for this price.

I don't think it's MUCH of a sacrifice, but what would it cost to rent?

I think in the region of £900 to £1,000 a month, realistically.

The property went to auction with a guide price of between 200 and 220,000.

Is that about right in today's market?

I'd put this on the market in the region of £250,000 because we've got the stamp duty threshold at 3%.

That extra 2% stamp duty charged on properties over 250,000 can put a lot of buyers off.

Especially in the current climate.

A good, solid property that doesn't require too much work.

Once renovated, though, it would struggle to break through the £250,000 barrier.

So anyone taking this on to sell should be aware of that before auction day.

Having said that, there's a healthy rental return, and it'll be a good long-term investment.

Let's see who else thought so, as we go to auction.

40 Newbury Road in Bromley, Kent.

It's guided at 200, 220.

Lovely one, this one. What can I see for the first one?

Can I see a bid of 200 to start it off? Give me 190.

Not going lower than 190. It's bid. 190, I want to start it at. 190,000, 190 I've got.

200 I'm looking for. 200 anywhere?

200 I've got. 210? 210.

We've got 200,000 on the right-hand side. 210, anywhere else?

210 in a fresh place. 220. I'll take 15 at this stage.

215 from a maiden bidder. 220 I'm looking for.

220 on the right, 220, and five.

225, and 30.

230. 230 I'm now looking for.

I'll be selling to the lady at 225,000 on my left-hand side.

Are you sure you're out? 230.

225 for the second time.

Third and final time at 230.

230, and five. 235 I'm looking for.

232?

232.

235? 232,000 on the left-hand side, I'll be selling for 232,000 for the first time.

232,000, if you're sure you're out, for the second time. 235. And seven?

237? No.

235 is with you on the right-hand side now.

237. If you're sure you're out, I'll be selling for 235 then, for the first time.

Selling at 235 for the second time.

Third and final time at 235,000 on my right, I will be selling.

If you're all done, 235, it's sold.

The winning bid of £235,000, 15 grand above the upper guide price,

came from 19-year-old Amy and Sarah, who's 22.

-Have you bought this house for yourselves? I saw you bidding at the auction.

-Yes, that was me.

No, we had actually bought it to rent, to do up, and let somebody else live in it.

-So what's your relationship?

-We're sisters.

-You're sisters?

-Yes.

-Who's the oldest?

-I am.

That's why you were bidding on auction day! You're incredibly young to be buying property.

-Is this your first property?

-Yes, this is the first one.

Our parents do it as a living, they do property developing. But this is our first project.

They've given us plenty of advice and helped us along the way.

It's been good to have someone who knows what they're talking about.

-Were they quite keen for you guys to do the bidding as well on auction day?

-Yes, very keen.

They want us to take control of the project, and if we need a hand, they'll be there,

but they kind of want us to do it.

# Sisters are doing it for themselves... #

With their parents in the property business, is it their chosen career, too?

I've actually just finished at uni, so I've been studying chemical engineering before this.

I've got a job, but I'm not starting until April, so to fill the gap

-I'm doing a bit of this property developing.

-And what about you, Amy?

I just started uni a month ago,

I'm doing mechanical engineering, so two engineers in the family, but I'm enjoying it so far, it's good.

So is property developing something you think you'd like to do just as a sideline because of your parents?

We definitely want to continue it and see where it goes,

-and get a few more properties, it's a good income to have.

-Yeah, between us.

-Yeah.

This isn't a bad one to start with.

Was it beginner's luck?

We've been looking around quite a bit.

We knew the location was important for us,

and this one is so near to the station you can commute into London, so that kind of sold it for us.

Yeah, pretty much that's all we were looking for.

And who did all the research? Were you both doing it independently?

-We do it together.

-So who is it who spotted this house?

We were just looking through the auction programme

and because this one is so near to our family home, it'd be convenient if we needed to do any work,

so this kind of jumped out from the beginning.

So did you view the property prior to the auction, Amy?

I didn't, I saw it today for the first time.

-So you've seen it for the first time today?

-Yeah.

-Wow! What do you think?

-I really like it, I was surprised to come in.

It was a lot better than I thought it would be.

-Really?

-It was a good surprise.

She shouldn't only be surprised, but very pleased that they managed to pick such a good property.

It only needs a bit of decorating and tidying up, unless of course they move that bathroom upstairs.

It seems OK to have it down here, it's not too much of a problem.

So what about putting in a bathroom upstairs?

You've got that very small room off of the main bedroom,

you can't do a lot with that, you've got a boiler stuck in the corner...

-Yeah.

-Any thoughts on that?

We're thinking about putting in a basic shower, bath and toilet, but I think it depends whether

we're going to get more renting income, whether it will be worth making the investment.

Such wise heads on young shoulders.

What about their budget?

We're either going to spend about five grand and do it up to a nice standard, or if we can find

somebody who wants to rent it as it is, then we don't have much to do other than a bit of cleaning.

So how soon are you going to be cracking on with this, how long is it going to take you?

We need to talk to some estate agents within the next couple of days, see what they say,

-and hopefully, if we can rent it immediately, it should be within the next couple of months or so.

-Really?

-Hopefully, yeah.

-Just as quick as possible. Even if we're painting the whole thing,

it'd only take a week, so as soon as possible, it won't be long.

Who out of the two of you is the one that's going to be barking all the orders?

-No, teamwork, definitely.

-We're quite evenly placed, yeah.

-Really?

-YEAH!

-I have to say, you're very similar, you both laugh

at the same time, you've got the same sort of mannerisms.

-People say that a lot.

-Even though she's older, she's not bossy?

-No.

-Not at all.

-So you're sisters that get on well?

-We do, we get on really well.

So it shouldn't be a problem working together.

Sarah and Amy haven't got too much to do to turn this around, and I think they're making the right decision

renting this out. The question is, will they do anything to it?

You can find out how the fledgling property developers get on later.

Coming up, I take a sentimental journey to Cheshire.

My property career started here.

In Kent, a lot of elbow grease has gone into this semi.

The guys who were painting it have made a bit of a mess,

so it's been a continuous cycle of cleaning everything.

But first, this house in Hampshire is spacious,

but still there are tight spaces.

The biggest task was getting the bed in here.

Back in Southsea,

Sam and Ton had bought a guest house for £248,000 at auction.

It came with a double extension and many options.

It could be converted into a family home or into three separate flats,

or let out to students from nearby Portsmouth University.

We've been looking for an investment for our children

and this was something which we thought we could

potentially turn into apartments,

or use as a letting income for the future.

# Everything I do

# I do it for you... #

Sam and Ton decided to go for the student rental option.

They finished the extension and turned the whole of its ground floor

into a kitchen-dining area.

The old kitchen, which was as cluttered and a bit out of date,

is now a utility room.

To increase the potential income,

they built two extra bedrooms - one in the extension above the kitchen,

and this one which also has its own shower.

Back in the main part of the building, that old guest house

dining room has become the property's eighth bedroom.

They've done an impressive job converting this place into student apartments.

Has their original plan changed as much as the property?

We did think about having it for our children,

primarily because it was going to be split up into three apartments.

But the feasibility of it, and also financially, it wasn't suitable,

so we're doing it this way and to be quite honest,

if we make a decent return on it,

or if it brings out a decent rental return,

we'll use that money to invest in something else for the children.

There's loads of students around here,

we've spoken to a few rental agents and they've said they can rent it out straight away.

The option of turning this into a student rental, instead of a home

or converting it into three flats, was a very good decision.

In a city with a university there's always going to be the need for good

quality accommodation, but to do this they'll have to be licensed

as a house of multiple occupancy.

We're in the process of applying for an HMO. We've still got all

the fire certificates which are all up to date,

all the fire doors, etc,

all the smokes are linked.

We just have to get an inspection,

we have to get the electrician to write it off and the plumber.

It's not far off, really, and we're there.

Sam mentioned that the property needed an inspection, so I think we should be the first to look around.

This room here we've had all rewired, for safety, mainly.

Furniture-wise, I've just had all this painted, rubbed down,

the same as up here, all rubbed down.

The biggest task was getting the bed in here

because it's a full-size one,

it was just a small one in here to start with.

But I think it's everyone's favourite room cos

you've got the panoramic view and it's nice and toasty.

Well, initially when I came in here it was a completely empty shell.

Most of the flooring was down, I mean there were floorboards missing.

I don't think you could get in here before.

This wall was partially up,

so initially we were toying with the idea of putting a bathroom in here,

again if it was going to be a house we would have done,

but because it's students we decided to just go for a shower room,

and I think it's come out great.

I think it looks fantastic.

In fact I think this would be my room, if I was a student anyway.

Turning the guest house into student accommodation

was the cheapest option available to them.

We were aiming for about 20.

Things went up - the plumber went up,

but some things went down so we didn't do...

The electrician went up.

I mean, I was pleased in regard to the amount of material

that I've been able to reuse.

Also, to be honest, because of the amount of time I've spent on the job,

we've brought our budget, we were hoping for 20, and it's come in...

-Just over.

-Just over 18 and a half.

No, it was about 18 and a half, wasn't it?

Something like that, just over.

They bought the property for £248,000

and spent around £18,500 doing it up.

They saved money because Sam's a builder

and did some of the jobs himself. How long did it all take?

It's taken about eight weeks,

because Sam went off and did a couple of other jobs.

We spoke to rental agents and we knew we weren't

really going to get students in before Christmas,

there wasn't a hurry,

so Sam went off and did a couple of bits of Bob's for other people,

so I think about eight weeks.

Bits and bobs? Yeah, a couple of other quite large jobs,

so we've been lucky in regard to tying it in with other work, yeah.

To check it was worth Sam at doing this work between his other

bits and bobs, we invited two local estate agents to look take a look.

It's newly refurbished, very presentable,

lots of en suite facilities, and the location is superb.

A good-sized property,

great location, most of the rooms are good sizes as well.

You've got the odd small room,

but then you do in every property.

A nice kitchen dining area as well.

Sam and Ton are going to let a management company

look after renting out the property as a whole.

That means they won't have to worry about individual flats

and will get just one income per calendar month.

If the whole house is occupied, we're looking at somewhere in the region of £2,000 per calendar month

which, yearly, is somewhere around £25,000, which is a good investment.

This property would rent at £2,225 per calendar month.

That's good. That's more than I was actually hoping.

It's more than we were thinking.

I'm not surprised that's more than they expected,

it's a very impressive 9-10% yield.

But what if they wanted to sell?

What's it worth on the open market?

If they were looking to sell it in the current market,

I would be looking to achieve somewhere between £350,000 and £375,000.

I'd put this property on the market for £350,000.

A nice turn around.

-And who were they?

-Yeah!

Sam and Ton can afford to smile.

They paid £248,000 at auction for this property

and then spent £18,500 on it.

If they sold it for between £350,000 and £375,000,

that would mean a potential profit of £83,500 - £108,500,

minus usual deductions.

That's a very useful nest-egg for their children.

Today, I'm heading back to my roots in Cheshire.

This is Irwell Road, halfway between Warrington and trendy Stockton Heath.

And this isn't the house that I'm here to see,

that's just round the corner.

However, it is a very significant property to me,

because my grandma used to live here

and when she died mum and dad sold it and used some of the money

to enable me to buy my first house.

So, if you like, my property career started here. Thank you, Grandma.

# Is this the place, we used to love?

# Is this the place that I've been dreaming of? #

Well the property I'm here to see is a slightly unusual one.

It's in this row of terraced bungalows -

we don't see that very often.

It could be a space-saving exercise,

or maybe they just ran out of money after they built the first floor.

Either way, this is it.

At a guide price of £70-80,000, two bedrooms, let's take a look.

It's certainly an odd one.

Bungalows are usually detached with a sizable plot of land around them,

but here it looks like they've sliced at the top off a terrace and bunged on a roof.

Well it's not going to be massively spacious, is it?

But, actually, it's not too bad.

The front sitting room here,

lots of light pouring in through the windows, not a bad-sized space,

gas fire, want to have that checked out.

It's a bit tired, a bit dated,

as you can tell by the carpet and the wallpaper.

But overall, hmm, it's looking positive.

It actually feels cosy without being cramped.

I'd get rid of the patterned paper.

Just doing that would make it feel even bigger.

The front bedroom is also a bit floral,

but space-wise it's not bad.

Aside from some peeling wallpaper,

I really can't see anything wrong with it.

The same goes for the back bedroom, though the theme has moved from

flowers to fruit - oranges in the case of this carpet.

But this is all superficial. The room itself is very pleasant

and you could take out that fitted wardrobe to make it larger.

The bathroom is, well, it's black,

but not with dirt, I'm pleased to say. I rather like those tiles.

It's a decent space, and with a shower installed it would be ideal.

So, the bedrooms are fine, the loo and bathroom's fine,

what absolutely isn't fine is the kitchen!

I mean, I know the bungalow is small,

but this is absolutely microscopic!

Look, I can touch both sides!

The bad news is, I can't really figure out a way of improving this.

There's a cupboard at the end there that you could take out,

you can't knock this wall down,

I think it's going to be basically about choosing your units carefully,

choosing your decorations carefully,

and making the most of what is a pretty small space.

Perhaps the answer to gaining some floor space in this bungalow lies elsewhere.

At the back here - a decent-sized rear garden

which is definitely good to have,

but what can you do to increase the interior space?

And much-needed THAT is.

Well here's an idea, look what the next door neighbours have done.

They've put a dormer on there and created an entire new room upstairs.

In that loft... you have the potential,

it's an untapped potential, to do that.

I reckon stick one of those in

and you'd really change this bungalow around completely.

Converting the loft,

subject to planning permission of course,

means there's an opportunity to rearrange the layout downstairs.

It also broadens the market for this property to include families.

And there's another little extra just a short distance away.

It's a bit of a walk across the tarmac, but the property does come with your very own garage,

a perfect place for a workshop, storing your tools,

the usual things that people do with garages - basically fill them with junk.

In terms of a car parking space,

well, there is already car parking right outside the property.

So in terms of adding value?

Well, in London, this might add a couple of hundred thousand quid, you never know.

Here in Warrington, it's nice to have.

I like this bungalow and the area, not only because it has sentimental value for me,

but it's a good property in a convenient location, and a loft extension

could make it even more appealing.

I asked a local estate agent for his opinion.

Certainly, having had a look through the property,

it does need total redecoration.

The main areas, bathroom and kitchen.

Whether one incorporates the kitchen into another room,

is a matter of choice.

It's not a large property, it's adequate in its accommodation.

It's obviously restricted, probably to first-time buyers or a retirement couple,

a little bit tight for a family, but it's got marvellous potential

and it's the convenience that it has to Warrington and Stockton Heath.

I think that's what will probably draw the buyer to it.

It's a good investment property, it would rent well.

So, a good location with plenty of potential, and it should rent easily - but how lucratively?

The property would rent in my opinion at £450-£470 per calendar month.

The bungalow went to auction with a guide price of 70,000-80,000, but what could it be sold on for?

Once renovated, I feel that the property would be on the market at £120,000.

Well, small but perfectly formed - what this bungalow lacks in size, it makes up for in location.

And even a pint-sized property like this, around here is definitely something worth going for.

Plus, there is scope for development.

Let's see who fancied it when it went to the auction.

5 Arnside Grove at Warrington,

80,000 for it?

70 then?

At 60, all right. 60,000, I've got.

At 62,500, I've got you, sir. At 62,500.

Yes, 65. 67,500, sir? At 67,500.

At 67... 70, At £70,000. Two and a half, sir?

72,500.

75, at 77,500, I've got you.

78,500, all right, you're tempting providence, it's 78,500.

At £80,000.

At 81 here. At 81.

At 82, sir?

82,000. At 83, I've got you.

84, sir?

84,000. At 84,500.

At 85. At 86, at £86,000.

87? At £86,000

it's going to the highest bidder once, twice...

87. 88, sir?

500, then. Don't miss it for 500.

At 87,000. 87,500. At 87,500. 88.

At £88,000. At £88,000 once, the bid is with you, sir. At £88,000 twice.

At 88,000 it's with you, sir, I'm selling for the third and final time.

HAMMER BANGS

The successful bid of 88,000 - £8,000 above the guide price - was made by Mark.

Now, he may look familiar as he's been on this show before - not once, but twice.

# It's deja-vu... #

When we first met him in April 2006, he was buying his fifth property.

I went to get an update on Mark and his newest property.

This is project number 59, now.

-59?

-Yeah.

-Wow!

Been quite a successful few years, then?

I've been busy, that's for sure.

Tell me what you've been up to.

Well, I've... At first - I started when the property market was buoyant - I was buying,

doing up quickly, and selling quickly, and I was doing OK at that.

Then we started to get into a bit of difficulty.

I was left with four properties that I couldn't sell,

I had no option but to let them out because I was quite heavily financed on them,

and luckily, interest rates started coming down,

so that then provided me an income, which then allowed me to continue.

Since then, I've been buying on a buy-to-let basis,

and I've been buying something like one a month, basically, since then.

-So you've changed your strategy?

-I've had to.

The old strategy doesn't work at the moment - or doesn't work for me, anyway!

He did the right thing by adapting his strategy around the changing property market.

He bought this bungalow specifically to rent it out.

I could rent it as it is, right now, it's not that bad,

or I could...do a full refurb job on it and get more.

The difficulty is, if I do a full refurb job on it, it might take me something like...

I think I worked out, five years to get the money back on the increased rent that I would get.

Oh, wow.

So I'm probably going to end up just decorating and changing the carpets,

and pretty much leaving the bathroom and kitchen as it is.

What difference would it have made to the rent and how much would it have cost to do these things?

OK. I have taken advice and I've looked at the numbers myself.

I think I could rent this in its current condition, right now, for £400.

I figured that if I spent something like £6,000-£7,000 on it, I could probably get £500 a month.

-Right.

-I think the top-end rent I could get if I change the bathroom and the kitchen

and really went to town on it,

the best I could do is probably 575 or maybe 600 for this particular property.

So on that basis of, say, an extra £100 a month, that's £1,200 a year.

If you've spent £6,000, that's five years or whatever.

It takes a while to get it back, so you ask, "Is it worth it?"

I think what I'd prefer to do, is put a new kitchen and bathroom in it when I come to sell it,

five or six, maybe ten years' time, whenever the right time is.

So anything like putting a dormer in is out of the question?

I don't believe I can get much more increase in rent

by putting a dormer in, that's another increased cost again.

The strategy might be different when I come to sell it.

It might be worth turning it into a three-bedroom house rather than a two-bedroom,

so that's a possibility.

Mark's done all the sums and is only going to do work that will add value to the property.

There's not a lot to do here, so it should be ready for letting out soon.

If I stick with that plan, four weeks tops,

if I'm talking bathroom and kitchen as well, I might go the whole hog, you'll come back, I might do it...

-You might do the kitchen and bathroom?!

-I might do.

-No!

After all you've just said?

Well, it goes back to the labour of love.

You've seen the properties I've done in the past, I like doing this, you know.

Commercially, I shouldn't do anything, just get people in the door,

£400 a month, thank you very much.

-But...

-MARTIN LAUGHS

-I know.

-Well, you can't knock it, it's been successful for you,

whether the strategy is completely right or not,

it's working for you, so I don't think you can knock it.

So, Mark's showing exactly what it takes to be a successful property investor.

You need to adapt to market conditions to survive.

That is exactly what he has done,

and over the last three years, we've followed his successes on Homes Under The Hammer.

I'm sure there will be many more.

With this place? Well, as far as I'm concerned the big question is, will he let his heart rule his head?

I think he might.

You can find out how he gets on later in the show.

Well, there's no time like the present and we're dying to see how our buyers have got on.

Yeah, let's go back and find out.

This two-bedroom semi-detached house in Bromley was bought at auction for 235,000.

It's only a short walk from Bromley train station, which is then just a 20-minute commute into London.

The property, which was in good condition, was bought by sisters, Sarah and Amy,

whose parents are property developers.

They want us to take control of the project.

If we need a hand, they'll be there, but they want us to do it.

As it happened, the girls were very lucky. There wasn't that much to do.

# You're the lucky one So I've been told

# As free as the wind blowing down the road

# Loved by many Hated by none

# I'd say you were lucky cos I know what you've done

# Not a care in the world Not a worry inside

# Everything's going to be all right

# Cos you're the lucky one... #

We've just kind of painted all the walls,

we've cleaned very well the whole place, and we've got new curtains in and that's about it, really.

An alarm system and that's all.

You make it all sound so easy.

But, hang on, weren't there two of you before?

Amy's been quite busy at uni but she's been back when she's had the time.

She's been on the phone checking everything's OK.

So, she's been involved.

Ah, good. Let's see what they've been doing, then.

OK, all we've done in here is just put in some new doors.

We've used glass ones to let the light through the house a lot more.

And just some new handles on them and painted them all nicely.

We've also added a new curtain in here, so I now know how to use a sewing machine, as well!

That's the thing about property development - you're always learning.

The sisters decided not to turn this small room into a new bathroom

and kept the original one downstairs next to the kitchen.

Have they had any problems?

There's been a lot of time spent on cleaning.

Every time we've cleaned the house, the guys painting it have made a bit of mess.

So, it's been a continuous cycle of cleaning everything.

But it's made such a difference to the whole place, especially the kitchen.

So, yes, it's been worth it.

Well, it certainly looks sparkling and fresh as a result of all that elbow grease.

It turns out that Sarah's mum and dad have been helping out.

When I've been busy or away from the project,

my dad's been here making sure the guys get on with it.

My mum has also been around just helping me clean and making tea for everyone

so it's been quite... quite a good family event.

How did the sisters get on outside?

I have to admit outside isn't my strong point.

I've just done... My dad's done a lot of pressure washing of all the stones out here

and I think it's made a big difference, it looks a lot cleaner.

My mum's done a lot of gardening, trimming all the shrubs

and it generally makes the space a lot bigger.

We've also put a new roof on the shed just to make it watertight

and put a security light up so that, even in the night time, they can use the space.

It's lovely to have somewhere to relax or sunbathe

even if it's overlooked by a multi-storey car park!

I can't imagine that costs here have been particularly high so far.

I'd say we've definitely spend under £1,000. Probably about £900, so a small budget.

It is a low spend, but the girls were very lucky with this house and that it was in such good condition.

They're planning on renting it out, so what have they done to ensure they're good landlords?

We've just done all the regular safety - the gas checks and certificates.

We've put in smoke alarms everywhere and we've installed a burglar alarm. There's sensors in every room,

just so the tenants are going to feel safe when they're here.

The girls seem ready to go. To check it out,

we invited a couple of local estate agents to give us their opinion.

It's a good looking property.

It's got nice windows, it's got good kerb appeal.

It's still bare brick, which is nice. It keeps it original.

The property's changed a lot, actually.

Good, fresh lick of paint everywhere.

Nice, dressed curtains, dressed all the windows nicely.

New blinds in the kitchen, chose very nicely.

It's a nice, newly decorated property.

It's neutral, which is good. People can then see what they can do to put their own stamp on it.

It looks as though the girls have landed on their feet with this one.

And that it should rent out fairly easily.

I think to rent this out, on a calendar month

you're probably looking in the region of £900 - £1,000.

I would market the property at £1,000 per month and hope to achieve about £950 per month.

We had a tenant that fell through. They were meant to be moving in

tomorrow but we've actually had another offer on the property

so we're really happy and that's for £1,000 a month. That's exactly what we wanted.

Well, they certainly seem to have a guardian angel.

They only bought it a month ago for £235,000 and have spent less than £1,000 doing it up.

Could they already have added value to it?

I would put this property on the market for £259,950 to achieve somewhere in the region of £250,000.

I would market this property at £255,000 to achieve £250,000.

Because of the stamp duty threshold, you'd struggle to get over that.

I'm really happy. I didn't think it would go up in price as it's only

been a month since we've been doing up the place. I'm really pleased.

If they sell it for £250,000, that's a potential profit of around £14,000,

minus the usual deductions.

Not bad for four weeks's work!

It's been quite easy for both of us. Obviously the project hasn't had

too many complications and there hasn't been too much stress.

So it means that we're ready to do another one soon.

I'm really impressed with Sarah and Amy's first venture into the property development world.

They made a clever investment here and benefited from their parents' experience of the business.

Even those doors were left over from a project their father was doing.

If they keep this up,

it might be curtains for their engineering careers.

Mark bought this two-bedroom bungalow in Cheshire at auction.

He paid £88,000 with the sole intention of renting it out.

I could rent it as it is, right now. It's not that bad.

Or I could do a full refurb job on it and get more.

Four months on and it looks like someone's moved in.

Not a huge amount has changed, though there has been some redecoration. What's the story then?

Well, Mark did replace the boiler and get the required gas and electrical safety tests done.

Before spending big money on refurbishment, he advertised

the bungalow at a low rent just to see if there were any takers.

There's quite a few things I was going to do, which is change the bathroom and the kitchen.

And generally change the decor, just kind of modernise the place.

That would have meant I'd have had to charge a lot more rent, in the region of something like 525-550.

But as I didn't have to do a great deal to the property, I was happy to let at £395 per calendar month.

As luck would have it, the timing was perfect for young couple, Nicola and Andrew.

They were delighted to move into the bungalow, pay a lower rent

and just to do enough improvements themselves to make it feel like home.

We basically just, needed somewhere to live, it was getting a bit expensive where we were.

And I went into work and just happened to mention it to one of my colleagues,

who's sister is from a letting agency and she said they'd just got this place come up.

-So we had a look at it that day and just decided we'd go for it.

-Yes.

It sounds like a good deal for everyone.

Landlord Mark has done minimal work while his new tenants,

Andrew and Nicola have got a new home quickly and at a lower rent.

We're getting the rent cheaper than it would be ordinarily,

because we're doing the decorating and the DIY, things like that.

And then after we've done that it should stay the same.

Hopefully!

Nicola and Andrew have mentioned that over time they'll just improve

their living space, which obviously suits me perfectly.

In return, I'm happy for them to let the property from me for as long as they like.

Gradually they've been sprucing the place up and adding personal touches to make it feel homely.

One of the first rooms the couple wanted to tackle was that tired old bathroom.

When we first moved in, this bathroom was pretty grim.

It had green wallpaper, it had dirty green carpets.

So we pulled up the carpets, put some new flooring down, painted the walls white,

installed a brand-new blind and a brand-new shower and some shelves.

As well as doing the bathroom, the couple have also decorated the bedrooms,

one of which is now a dining room.

They've also freshened up the sitting room.

Surely that's all they'll do as it's rented accommodation after all?

This is the kitchen. Obviously, very, very '70s, outdated decor.

Not one of my favourite rooms, I have to admit.

I think, once we've got the money to do it, it's going to be a long-term project.

When we can afford to do it, when we've got the time, maybe just replace the walls.

I don't mind the tiles, they'll probably stay. But sort out new flooring,

change the cupboard doors, just freshen it up, give it a modern look.

Sort out that ceiling, get rid of the light and maybe some spotlights.

Just, like I say, freshen it up, make it more modern, a nicer space

to work in, rather than this very retro, pretty grim kitchen.

But it's functional, so that's the important thing.

That's potentially a big expense.

They shouldn't spend too much on things they can't take away.

-So far, money-wise, I think we've probably spent a couple of hundred at least.

-Yes.

I think we want to replace the carpets, definitely in here and in the bedroom.

We definitely need to replace the carpet in the dining room,

that lovely, orange carpet.

But it's just a case of when we can afford to do that, we will.

They may want to make some more changes to the bungalow, but what are Mark's impression so far?

This is the first time I've returned to the property since the tenants have moved.

I am delighted with what they've done to the property and how they're looking after it.

They're ideal tenants and as a landlord I cannot ask for more, really.

Mark's pleased with the improvements.

But has the rental value been affected?

We asked two local estate agents for their thoughts.

It's an interesting bungalow. It's got plenty of space inside and out.

Good part of South Warrington

but obviously needs improvements in places.

The property does need substantial modernisation to attract a better

market, both in terms of the market to sell and the market to rent.

Mark paid £88,000 for this property at auction and is currently getting £395 per calendar month.

So is that about the right rental rate?

With the slight improvements that have been made

I would expect to put it on the open market for at least £395-£450 per calendar month.

I would say a rental here of approximately £450 per calendar month, in its present state.

Those rental valuations seem to be in line with what I'm thinking.

I'm currently happy with the rent I'm achieving for this property and what I paid for it.

And as long as Nicola and Andrew are happy, I'm happy too.

This seems to be a win-win situation.

Nicola and Andrew get a home at the lowest rental price and Mark has tenants looking after his property.

What are the couple's long-term plans?

Long term, I think we'll stay here for a while.

Yes, we've got quite a good set-up, haven't we?

We can do what we want with the place, make it our home.

It's somewhere we can see ourselves staying for a while, definitely.

And when we've finally got a deposit to buy our own house, we can move on.

I just hope Andrew and Nicola don't get carried away

and spend all their deposit on this rented accommodation.

Well, that's all we've got time for.

We hope that today's properties have surprised, inspired and entertained you.

Join us next time for more Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

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